http://www.economist.com/world/unitedstates/displaystory.cfm?story_id=13375986
A WEEK or so ago America was seized by a spasm of fury over the bonuses paid to executives at AIG, a troubled insurance company. Across the country Americans were enraged that people who had helped to cause the financial meltdown were being rewarded for their incompetence. And Washington responded in kind.
Congressmen queued up before the television cameras to tell everybody how upset they were. Larry Summers, the president’s chief economic adviser, described the bonuses as “outrageous”. Even Barack Obama tried to drop his ultra-cool persona to say how “angry” he was. The House voted overwhelmingly to impose a 90% tax on such bonuses.
The media responded to the storm of outrage by producing a stream of articles on American populism—the political disposition that damns established institutions, from Wall Street to Washington, and tries to return power to “the people”. Newsweek devoted almost an entire issue to the subject.
But no sooner was the ink dry on these articles than the populist storm seemed to blow itself out. Many of the journalists who had been fanning the flames of anger attended a white-tie Gridiron Dinner in Washington on March 21st to perform silly song-and-dance routines. Wall Street rallied two days later when the treasury secretary, Tim Geithner, published his plan to tackle toxic assets held by banks. Steny Hoyer, the House majority leader, suggests that bonus legislation “may not be necessary” now that 15 of the top 20 “bonus babies” at AIG have agreed to give their bonuses back.
Was the fuss over AIG a sign of a new populist mood in America? Or was it just a storm in a teacup? It is hard to answer this question in a country in which anger is a form of entertainment and where the political parties have turned partisanship into a fine art.
Originally posted by generalissimoI haven't heard the term populist since I was a little boy on the farm back in 1902!
http://www.economist.com/world/unitedstates/displaystory.cfm?story_id=13375986
A WEEK or so ago America was seized by a spasm of fury over the bonuses paid to executives at AIG, a troubled insurance company. Across the country Americans were enraged that people who had helped to cause the financial meltdown were being rewarded for their incompetence ...[text shortened]... form of entertainment and where the political parties have turned partisanship into a fine art.
Originally posted by generalissimoIt is of my opinion that it was done all for show. Instead of brining charges to those within AIG they simply slapped their hands by taxing their bonuses. Even at that, they did not take all of the bonus they received.
http://www.economist.com/world/unitedstates/displaystory.cfm?story_id=13375986
A WEEK or so ago America was seized by a spasm of fury over the bonuses paid to executives at AIG, a troubled insurance company. Across the country Americans were enraged that people who had helped to cause the financial meltdown were being rewarded for their incompetence ...[text shortened]... form of entertainment and where the political parties have turned partisanship into a fine art.
In short, those within government are just as culpible as those in the corporate world for the whole debacle and those in government don't want CEO's behind bars any more than the CEO's want those in government behind bars for what has occurred. After all, they are and were in it together.
So why do anything at all you may ask? I suppose after wiping out half the wealth of the American people some form of punitive action was in order. So now that those within AIG no longer have a bonus we can go about business as usual with the powers that be that over saw the debacle are still safely firmly seated in their same positions. Comforting, eh?
Originally posted by KazetNagorraIndeed. They are all just sitting back hoping that this will appease the public outrage. Pathetic!!
There should be a consistent policy on the issue of disproportionate rewards in the corporate sector. Responding to public outrage by making a special rule for a single company is rather weak.
Originally posted by KazetNagorraYes KN, and you should decide what is disproportionate. Please let me know as I am holding my breath awaiting your wise words.
There should be a consistent policy on the issue of disproportionate rewards in the corporate sector. Responding to public outrage by making a special rule for a single company is rather weak.
Originally posted by dryhumpIndustrialized nations should just implement a Tinbergen norm (perhaps with a more generous limit) by law. This would fix the economic crisis on the spot.
Yes KN, and you should decide what is disproportionate. Please let me know as I am holding my breath awaiting your wise words.
Originally posted by KazetNagorraSteve Buergi B.S. and Ph.D - Professor and Researcher
Industrialized nations should just implement a Tinbergen norm (perhaps with a more generous limit) by law. This would fix the economic crisis on the spot.
“I respectfully dissent. The Tinbergen Norm is a bad idea and a bad practice, even if the pay ratio has risen in recent years. It’s not the difference in wages between the highest and lowest level paid that is most important, but the ability of those in the lower percentiles to rise up.
Whenever there is little difference in income between those who work hard and achieve and those who don’t, there would be little incentive to work hard and achieve."
For nearly 75 years the U.S. led the world in income mobility partly because of the lack of pay schemes like the one cited. I think you do agree, at least in part with Dr. Buergi's take because you suggest a "more generous limit" to Tinbergen norm.
Originally posted by MacSwainWhat are Buergi's arguments? Surely it can't be as simplistic as the argument you quoted.
Steve Buergi B.S. and Ph.D - Professor and Researcher
“I respectfully dissent. The Tinbergen Norm is a bad idea and a bad practice, even if the pay ratio has risen in recent years. It’s not the difference in wages between the highest and lowest level paid that is most important, but the ability of those in the lower percentiles to rise up.
Whene n part with Dr. Buergi's take because you suggest a "more generous limit" to Tinbergen norm.
In fact, I think it's the other way around. If the amount of money you can make as an employee is limited, hard-working people will be encouraged to start businesses of their own, with unlimited prospects for income. People who are good at social networking will still become CEOs.